User Image Admin Istrator Shared publicly - 2020-10-01

What is Spread in Forex Trading ?

Forex brokers will quote you two different prices for a currency pair: the bid and ask price.

The “bid” is the price at which you can SELL the base currency.

The “ask” is the price at which you can BUY the base currency.

The difference between these two prices is known as the spread.

Also known as the “bid/ask spread“.

The spread is how “no commission” brokers make their money.

Instead of charging a separate fee for making a trade, the cost is built into the buy and sell price of the currency pair you want to trade.

From a business standpoint, this makes sense. The broker provides a service and has to make money somehow.

  • They make money by selling the currency to you for more than they paid to buy it.
  • And they also make money by buying the currency from you for less than they will receive when they sell it.
  • This difference is called the spread.